Faced with the growing North Korean threat and expanding Chinese power, Japan's defense and aerospace industry will use this week's air show in Tokyo to push the case to develop a highly advanced, and costly, stealth fighter jet.

The new fighter, dubbed the F-3, is to serve as a key component of Japanese air power in the coming decades and could cost Asia's second-biggest military as much as $40 billion, depending on its specifications.

The government faces a crunch choice between ordering an industry-pleasing advanced stealth fighter or opting for a cheaper conventional combat jet that will deliver a bigger bang for taxpayers' yen.